Category Archives: Tax Immigrants

Undoubtedly certain flaws constrain the current US immigration policy. That is why President Obama called it ‘broken’ and fixing it. These flaws are linked to the ills that the state is facing. It may be bulging fiscal deficits, lag in job creation or losing competitiveness. The new immigration bill seeks to rectify many pitfalls in the current immigration policy in the US.

Under the Obama immigration policy under consideration, a positive fiscal impact will be reducing the deficit by billions of dollars. The Senate bill will then slash the deficit by $200 billion in the next 10 years and $700 billion in the next decade. The deficit will be bridged when the spending shoots up and revenue spiralling. In a decade the government pay out of $262 billion on Medicaid will be levelled off by raising revenue to the tune of $459 billion.

Economic Gains

The new bill has a road map of 12 years of waiting. That means the legislation will constrain undocumented workers winning provisional status from receiving a broad swath of government benefits. That will also keep the costs down. It is worth noting that the broader economic impact would be significant when certain factors are considered broadly. They include increases in

Extra Labour force

Raising average wages

High capital investment

Productivity

So, the bill will catapult economic output by 3.4 percent in 2023 and 5.6 percent in 2033.

Immigration Lawyers Support

Meanwhile, the American Immigration Lawyers Association (AILA) hailed the Immigration Innovation Act of 2013 (I-Squared Act) moved by some Senators calling for critical reforms in high-skilled immigration sector. It notes that America badly needs innovation, creativity, and job growth for economic recovery. AILA Treasurer William Stock urged the President and Congress to enact a comprehensive bill to address the nation’s crying immigration needs. The I-Squared Act calls for expanding the number of green cards to meet economic demand without taking away green cards from other immigration categories.

The responsibility to verify the legal status of workers employed in worksites is vested with the federal agency Immigration Customs and Enforcement called ICE. It has a comprehensive worksite enforcement strategy. The focal areas are critical infrastructure worksites like airports, nuclear plants, seaports, chemical plants, and defence facilities. They also verify those employers who exploit undocumented workers.

The ICE can take action against even ordinary businesses such as hotels, restaurants, construction firms, food plants, SMEs etc in case they are hiring undocumented workers.

Prior to 1986, employers were risk-free with regard to hiring undocumented immigrants. At the most, they will lose a worker through deportation. From 1986, the worksite became an enforcement site for immigration law to check the work authorization of every worker. The employers were slapped penalties and criminal prosecution for hiring workers without appropriate documents.

So an employer will be in legal peril if known he employs undocumented immigrant workers in case business is not part of the critical infrastructure.

Employers have to confirm the work authorization of every new hire using Form I-9 for the purpose. Civil and criminal penalties for hiring undocumented immigrant workers range from a minimum of $375 per unauthorized worker for a first offence with a maximum of $1,600 per worker for a third or subsequent offence. But engaging hiring undocumented workers become a pattern and practice the fine can be $3,000 per employee or imprisonment for six months.

In President Obama’s view the businesses should only employ people legally authorized to work in the United States. Otherwise businesses are exploiting the system to gain an advantage over businesses that play by fair rules.

The new immigration reform Bill is part of the President’s proposal to stop unfair hiring practices and hold errant companies accountable. It is also an incentive to ethical employers who play by the rules to verify that their employees are perfectly legal and qualified.

Ever since Ronald Reagan initiated the immigration reforms in 1986 covering an estimated 5 million unlawful immigrants the United States has not witnessed any large scale reform initiatives on immigrants as the Obama initiative in 2013.

The Obama initiative which came out as a bipartisan bill on immigration saw the nod of the Senate and is awaiting its destiny at the House of Representatives. In the House of Representatives the Republicans outnumber the Democrats and may see many surprises. There is an effort to give an economic flavor to the new Bill by making it an effort aimed at expanding the base of tax paying population.

Obama’s new bipartisan Migration Reform Bill is seeking to mainstream 11 million immigrants who are illegaly living in the US. The Bill hopes to provide citizenship to them in 13 years under certain conditions. The undocumented migrants have to become proficient in English, pass criminal detection checks, pay fines and back taxes.

Under the lens of immigration tax laws, 11 million immigrants joining the legal workforce will add to more competition but they will expand the tax base.

The tax immigrants after gaining legal status will create jobs as they become productive and earn higher wages. When legal workers earn higher wages and spend money on housing, clothing and food demand for goods and services will shoot up the economy will grow.

Legal wage earners will increase spending tax revenues too will increase. It has been noted that in year 2010, undocumented Latino workers missed out on $2.2 billion in income and the federal government lost $1.4 billion in taxes.

If the Immigration Reform Act of 2006 had been signed into a law there would have been an estimated $65 billion in new revenue to the federal exchequer between 2007 and 2016.

Prior to the current Immigration Bill that Obama took the lead in introducing is an extension of Obama’s humane approach to the problem of illegal immigrants and fixing it positively.

In a measure what is now known as Obama Immigrant work permitObama showed his interest in utilizing the manpower of second generation illegal immigrants.

Offering an olive branch to illegal immigrants to stay in the country under the plan Request for Deferred Action for Childhood Arrivals and apply for a work permit the programme started from 15 August.

The program was a bonanza for young immigrants arrived in the U.S. as kids or teens before their 16th birthday and had been living in the US for at least five years, in school or graduated or served in the military.

Only work no Citizenship

The Obama work permit stops the agony of deportation and gives work to the unauthorized immigrants devoid of any criminal record. They can stay and use the work permit for two years but would not get citizenship.

The process of work permit applicant needs $465 as paperwork fee. The immigrant applications do not use taxpayer dollars as fees are collected.

Says an analyst, American taxpayers will not allow to bail out illegal immigrants under President Obama’s irresponsible policies. The government says close to one million immigrants in the first year would be eligible to escape deportation. The remaining 151,000 immigrants would be rejected as ineligible.

Time Frame

The applications take two to 10 days for the Homeland Security Department to scan and file it. It takes four weeks to make an appointment for immigrants to submit fingerprints and take photographs. Background check takes six weeks and the government takes more months to make a final decision before a work permit is issued. Overall it takes 6 months. The immigrants would not be detained by immigration authorities while their application is pending.

Ever since the new immigration law came into circulation, the focus has been on the demand upon illegal immigrants to pay ‘back taxes’ in what can be called an immigration tax. Some gain the impression that the immigration bill is now all about tax collection.

The prime selling point of the “Gang of Eight’s” pathway to citizenship for estimated 11 million illegal immigrants is the clause to pay “back taxes” in addition to other fees and penalties. So the people who came illegally have to pay a penalty but not forever exclaimed John McCain.

McCain, the bipartisan Senate group’s chief negotiator noted that back taxes and a fine should make sure that they get in line behind everybody else.

However, confusion prevails to the extent to which the sweeping immigration-reform would pursue past taxes owed by immigrants. Many undocumented immigrants pay their income taxes may be by using Social Security numbers or filing tax returns through taxpayer identification numbers.

So immigration experts speculate that there is not as much money waiting to be tapped as one might expect. Determining back taxes by the large share of immigrants who have worked for cash and off the books could be a challenge.

Critics of “amnesty” for undocumented immigrants say politicians talk about extracting back taxes because it appeals to American pride that everyone should pay their share and there should be consequences for staying illegally.

Steven Camarota, Director of research for the Center for Immigration Studies calls it rhetoric to make the amnesty slip down immigration enforcement and overall reductions in immigration.

In 2007, President George W. Bush persuaded late Edward Kennedy to yank a back-taxes requirement for an immigration bill as it was too much of a bureaucratic headache to implement. Even the Immigration Reform Act of 1986 did not include a back-taxes requirement.

President Barack Obama put Immigration issues in his legislative agenda for 2013. But in the immigration reform discourse shifted to Tax immigrants battle cry spearheaded by Republicans. As a result more of tax-related bugaboos are surfacing as people are guessing whether undocumented immigrants have to pay taxes to states or the federal government.

Now the Hametian question repeats-To be or not to be.

Meanwhile the Institute on Taxation and Economic Policy (ITEP) worked into the issue to assess the hard truth whether undocumented families really pay taxes. According to ITEP, the illegal immigrants paid the same regressive taxes that affect low-income families at the state and local level. In fact, nationwide the undocumented families paid $11 billion in state and local taxes in 2010.

Sales and excise taxes are a problem for low-income taxpayers who do not depend on citizenship status for any goodies. Every time a a cup of coffee, or a pair of jeans is purchased or you fill up gas, local sales and excise taxes are paid by all.

The renters among them pay property taxes indirectly because landlords pass their property tax bills to their tenants in the form of higher rents. Some undocumented taxpayers have state income taxes withheld from their pay checks each year. Even if there were 47 percent of the population paying no taxes, undocumented immigrants would not be part of that.

Sop for Republicans

But some see the proposal of unpaid taxes collection from illegal immigrants as a gimmick to win over Republican as a pathway to citizenship for 11 million people.

The sharp amendment authored by Senator Orrin Hatch require illegal immigrants to pay back taxes before applying for citizenship. But critics frown the amendment saying it will scupper the bill. The Tax immigrants is unrealistic as an illegal immigrant who had been working in an underground economy cannot calculate unpaid taxes and shell out huge amounts to the government.